NextEra Energy Partners LP :NEP-US: Earnings Analysis: Q1, 2017 By the Numbers : April 25, 2017

NextEra Energy Partners LP reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of NextEra Energy Partners LP – 8point3 Energy Partners LP Class A (CAFD-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 175 million, Net Earnings of USD 12 million.
  • Gross margins narrowed from 46.67% to 44% compared to the same period last year, operating (EBITDA) margins now 68% from 72.12%.
  • Year-on-year change in operating cash flow of -28.57% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 175 176 186 171 165
Revenue Growth (%YOY) 6.06 1.15 80.58 59.81 122.97
Earnings (mil) 12 43 27 8 5
Earnings Growth (%YOY) 140 975 2600 100 150
Net Margin (%) 6.86 24.43 14.52 4.68 3.03
EPS 0.22 0.79 0.61 0.19 0.14
Return on Equity (%) 2.22 7.93 5.48 1.8 1.2
Return on Assets (%) 0.67 2.37 1.53 0.48 0.31

Access our Ratings and Scores for NextEra Energy Partners LP

Market Share Versus Profits

Revenues History
Earnings History

NEP-US‘s change in revenue this period compared to the same period last year of 6.06% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that NEP-US is holding onto its market share. Also, for comparison purposes, revenues changed by -0.57% and earnings by -72.09% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings rose year-on-year. But this growth has not come as a result of improvement in gross margins or any cost control activities in its operations. Gross margins went from 44% to 46.67% for the same period last year, while operating margins (EBITDA margins) went from 68% to 72.12% over the same time frame.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

NEP-US‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 28.34 days, compared to last year’s level of 20.13 days.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

NEP-US‘s change in operating cash flow of -28.57% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s operating (EBIT) margins contracted from 44.24% to 41.71%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from -10.30% to 28.57%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for NextEra Energy Partners LP

Company Profile

NextEra Energy Partners LP acquires, manages and owns contracted clean energy projects with long-term cash flows. It owns interests in wind and solar projects in North America, as well as natural gas infrastructure assets in Texas. The company was founded on March 6, 2014 and is headquartered in Juno Beach, FL.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of NEP-US.